Below £50, is Unilever's share price still profitable?

In the ever-changing world of markets, Unilever (LSE: ULVR) has long been seen as a stable Eddie. But with the Unilever share price hovering just under £50, I've been wondering: is the consumer goods giant still a steal?

It's a difficult year

Let's get into the nitty-gritty.

Unilever has been on a roller coaster ride lately. In the past year, its share price has fluctuated from a low of 3,616p to a high of 4,464p. That's a big change for a company known for its range of everyday essential products like A dove, Knorragain This is Hellmann's place.

So why the controversy? Well, Unilever was facing a storm of challenges. Rising inflation over the past few years has put pressure on consumer spending, while increased competition in key markets has made it difficult to maintain market share. It's not all doom and gloom – the company's latest financial report showed some signs of health.

In fact, Unilever posted a set of solid numbers in its latest financial update. Total organic growth came in at 4.4%, comfortably beating analyst expectations. Europe was the star performer, with growth beating forecasts of 4%. Even North America, a tricky market for many consumer goods companies, performed better than expected.

But that's where I think it gets interesting. Despite these positive signs, some analysts remain pessimistic about Unilever's prospects. They point to the increasingly challenging consumer environment, especially in the US, and are concerned about intensifying competition in all markets. If some are negative, and the numbers add up, I see an opportunity.

Numbers

So, are shares worth less than £50? Let's look at some key metrics. The stock's price-to-earnings (P/E) ratio sits at 19.8 times, which is neither cheap nor expensive in the sector. Its 3.35% dividend yield is attractive in today's low interest rate environment, especially for income-oriented investors. Based on the discounted cash flow (DCF) calculation, the shares are still about 10% below the estimated market value.

Obviously, none of this suggests a huge amount of growth, but in a sector like this, I'm after steady and steady growth over the long term.

The eyes of the future

Managers are not resting on their laurels. The company has been on an acquisition spree, acquiring trendy brands like Dollar Shave Club to stay relevant to younger consumers. It's doubling down on its sustainability efforts — a move that could pay off as consumers become more environmentally conscious.

But perhaps the most interesting development is the company's ongoing share buyback program. The company recently repurchased 100,000 of its shares, indicating confidence in its future prospects and likely increasing the value of outstanding shares.

So, what is the verdict? At less than £50, I think Unilever's share price could represent good value for patient investors. The company's strong product portfolio, consistent profitability, and efforts to adapt to changing consumer trends make it an attractive proposition.

Ultimately, the metrics I've looked at suggest that there isn't a huge amount of growth to be excited about in the near term, but with many of the key items in the company's product portfolio, I can see it growing slowly over time. Just don't expect to get rich overnight – this is a marathon, not a sprint. I will be adding shares next time.